Mesaba faces loss of jets, revenues
by Bill Catlin, Minnesota Public Radio
December 12, 2003

If the Avro RJ-85s go away, Mesaba would lose about 40 percent of its revenue. (Photo courtesy of Northwest Airlines)

Northwest Airlines and Mesaba Airlines have agreed to postpone a decision on whether Mesaba will keep its fleet of 30 jet aircraft. Northwest pays Mesaba to fly travelers from Northwest's hubs to mostly smaller cities in Minnesota, 29 other states and Canada. The issue of the regional jets complicates Mesaba's contract negotiations with its pilots union, as a strike deadline looms less than a month away.

St. Paul, Minn. —
One observer calls it "a uniquely bad situation" for Mesaba. The company is squeezed between its most powerful union and its only customer, Northwest Airlines. Northwest is deciding whether to withdraw 31 Avro RJ-85 regional jets in addition to five already slated to be removed from service. Mesaba leases the planes from Northwest, which owns 28 percent of Mesaba's parent company.

If the Avros go away, Mesaba would lose about 40 percent of its revenue. The Air Line Pilots Association estimates one third of the company's 844 pilots would be laid off as a result. Mesaba pilots union spokesman Kris Pierson says it appears the companies are trying to pressure the pilots, but he says it won't work.

"No matter what aircraft we have on the property, we're still going to want a fair and equitable contract to operate the airplane under. As far as their futures are concerned, [the pilots would] like to see the companies involved, Mesaba and Northwest, make a decision that would preserve their jobs, but the decision may come up that the Avro is going to go away and get replaced with another aircraft," says Pierson.

But he acknowledges there's no assurance the Avros will be replaced. Northwest officials had no comment when contacted about the Avro decision, but they have expressed concern about the Avro's costs.

Mesaba spokesman Dave Jackson says if the Avros go away it is important for Mesaba to replace the business those jets represent. But Mesaba may have to compete for that flying, and Jackson says uncertainty about the pilots' contract is an obstacle.

"Northwest has said publicly that if they take away the Avros that there would be additional flying potentially to replace them, and we need to be in a position to bid on that flying, and we can't do that until we have a pilot contract settled," says Jackson.

The pilots and Mesaba have been in negotiations for more than two years. The key disputes involve pay, job security, retirement benefits and work rules.

Airline industry consultant Doug Abbey of Avstat Associates says whether or not Northwest is trying to pressure the pilots by threatening to withdraw the Avros, there are financial reasons to set the planes aside.

"The decision to either dispose of the fleet or park it or sell it is a good idea," says Abbey. "There are better airplanes out there, better in terms of better economics."

The pilots have to decide whether they want to stay in the airline business or whether they want to sell real estate or gas.- Airline consultant Morten Beyer

Abbey says the Avros never gained widespread acceptance in North America.

Consultant Morten Beyer says Mesaba should be offering Northwest better terms in an effort to keep the Avros in place, regardless of the strike deadline next month.

"They've simply got to give a better deal, and tell the pilots to either take it or leave it. Then the pilots have to decide whether they want to stay in the airline business or whether they want to sell real estate or gas," says Beyer. He expects the pilots to give in.

However, University of Minnesota labor relations expert John Budd says regional airline pilots have more at stake in their jobs now than several years ago when regional airlines jobs they were a stepping-stone to a career at a big airline.

"It isn't very reasonable for the pilots to expect if they bide their time they are going to land a job at a major carrier, and so they have to worry more about, 'Can I really make a career; can I really make a living with the regional carrier?' And I think that's making the negotiations more difficult," says Budd.

Northwest and Mesaba have set Feb. 29 as the new deadeline for deciding on the Avros. Absent a contract agreement, the pilots are free to strike the night of January 9, unless presidential intervention extends that deadline.